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A Better Fed Idea

Updated Dec. 13, 2007 12:01 a.m. ET

Maybe we're finally getting somewhere. Yesterday's announcement that the Federal Reserve and four other central banks are offering a new way for banks to borrow is the kind of creative regulatory plumbing we've been waiting to see in this credit imbroglio.

While news reports described this as one more "liquidity" injection, it is important to distinguish yesterday's move from the overall monetary easing the Fed continued a day before. The latter is a blunt instrument that amounts to flooding the entire economy with...